Chinese scrap buyers seeking to share losses

Oct 31, 2008 | 11:59 AM | Shi Lili

Chinese scrap buyers have admitted that they are increasingly likely to default on import contracts as prices slump, but have called on foreign shippers to share the losses and renegotiate contracts.

Scrap companies in China have been badly hit by the downturn in metal markets, leaving many companies facing massive losses. Buyers are being far more vigilant about the quality and quantity of scrap shipments, and some are backing out of deals even though cargoes have been delivered, Chinese traders said.

Recent claims that a U.K. scrap trader was kidnapped and held for ransom in China following a dispute with a customer have highlighted fraught conditions in the scrap trade (AMM, Oct. 28)

"It is true that many Chinese buyers would rather sacrifice their deposit, usually around 20 percent, rather than take the overseas shipments lying at the ports," said a scrap trader based in Guangdong province in the south of the country. "There is no reason for Chinese buyers alone to swallow the losses caused by abrupt price slumps," he added. ....